The Spanish capital club are keen to add to their attacking options after the €40 million sale of Sergio Aguero to Manchester City and following news that Diego Costa will be sidelined for a period of at least six months with an injury.

Osvaldo was in good form last season for Espanyol and scored 14 goals in all competitions to attract the attention of a number of clubs in Europe.

Reports in Spain suggest that Atletico's €12 million for Osvaldo has been rejected by Espanyol as it falls short of the club's €20 million valuation of the striker.

Osvaldo, a former Italy Under-21 international, joined Espanyol in a €4.6 million switch last summer after a year on loan at the club.